Last checked at 8 Apr 2013 16:46
8 April 2013
Annual Financial Report
IMI plc (the "Company") announces that copies of the Annual Report and Accounts for the year ended 31 December 2012 and the Notice of Annual General Meeting for 2013 are available from today on the Company's website www.imiplc.com and may be viewed and downloaded online at www.imi.plc.uk/investors (click on Annual Reports).
Hard copy documents are being posted to shareholders who have elected to receive them and are also available from the Company Secretary at the Company's registered office at Lakeside, Solihull Parkway, Birmingham Business Park, B37 7XZ.
Copies of the above documents, together with the notice of availability to shareholders receiving web-communications and the form of proxy for the 2013 Annual General Meeting have been submitted to the National Storage Mechanism and will shortly be available for inspection at: www.hemscott.com/nsm.do.
The Company's 2013 Annual General Meeting will be held at the Hilton Birmingham Metropole Hotel, National Exhibition Centre, Birmingham on Thursday 9 May 2013, commencing at 11am.
The Company's preliminary results announcement of 7 March 2013 contained a management report as well as the audited financial statements which were prepared in accordance with the applicable accounting standards. The Annual Report and Accounts submitted to the National Storage Mechanism today also contains information regarding the Company's principal risks and uncertainties and a responsibility statement relating to the content of the Annual Report and Accounts (from the Directors in office as at 6 March 2013); an extract of this information is provided below as required under paragraph 6.3.5 of the DTR, however this material should be read in conjunction with and is not a substitute for reading the full Annual Report and Accounts. There are no related party transactions requiring disclosure. Page and note references in the text below refer to page numbers and notes in the Annual Report and Accounts.
DIRECTORS' RESPONSIBILITY STATEMENT
The following statement is repeated here solely for the purpose of complying with DTR 6.3.5. This statement relates to and is extracted from page 70 of the Annual Report and Accounts and is signed by order of the Board by John O'Shea, Company Secretary. Responsibility is for the full Annual Report and Accounts and not the extracted information presented in this announcement or the preliminary results announcement.
Directors' responsibility statement under the Disclosure and Transparency Rules
Each of the directors listed on pages 34 and 35 confirms that:
• the Group and parent company financial statements in this annual report, which have been prepared in accordance with applicable UK law and with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and
• the management report (which comprises the Directors' Report and the business review) includes a fair review of the development and performance of the business and the position of the Company and the Group taken as a whole, together with a description of the principal risks and uncertainties that they face.
PRINCIPAL RISKS AND UNCERTAINTIES
IMI could be affected by a number of risks which might have a material adverse effect on our reputation, operations and financial performance. The Group has in place an established risk management structure and internal controls framework which together are designed to identify, manage and mitigate business risk. A summary of the Group's risk management processes is given on pages 45 and 46 and the Group's approach to corporate social responsibility and associated risks is described on pages 26 to 31. In addition to the risks described here, the Group is also exposed to a number of financial market risks including credit risk, liquidity risk, counterparty risk, fluctuations in foreign exchange rates, interest rates and commodity prices. A description of these risks and the Group's centralised approach to managing them is described in note 18 to the financial statements. Further information about pension liabilities is given in note 19 to the financial statements.
The following table shows the principal risks, the potential impacts and mitigation actions. For each principal risk the current risk rating and change in risk in the year is shown, the latter by means of an arrow.
KEY RISKS
Risk | Description of risk and potential impact | Examples of mitigating actions |
Failure in health, safety and environmental controls resulting in employee fatality/ serious injury
| The Group recognises that it has a duty of care to all of its employees. The Group has made significant progress in the past year in relation to health, safety and environmental key metrics as detailed elsewhere in this report. However in the event of any failure in the Group's health, safety and environmental procedures there is a potential risk of injury or death to IMI's employees or others; or environmental damage, with the consequential impact on the operations and the risk of regulatory action against the Group. | ·; Established systems in place under the 'IMI Safety First, Safety Always' slogan, to ensure that health, safety and environmental matters are appropriately addressed and any such risks are minimised including monthly reporting to, and review at, the Executive and quarterly review at the IMI Board ·; Increase of full-time health, safety and environmental officers across the Group to ensure policies are embedded and measured ·; Regular review of Group safety performance including introduction of new incident reporting metrics ·; Group Environment, Health and Safety function with experienced specialist employees to provide support and guidance to businesses - including the conduct of regular risk control and health and safety audits ·; Maintenance of insurance for costs associated with any employers' liability, workers' compensation or equivalent claims and also certain environmental incidents |
Non-compliance with legislation and regulation
| The Group's worldwide operations and expansion in emerging markets expose it to different legal and regulatory requirements and standards in each of the jurisdictions in which it operates. If the Group fails to understand and comply with all applicable legislation it could lead to a breach of anti-trust, anti-bribery, fraud or tax laws. Any breach could have a financial impact and damage the Group's reputation. | ·; Commitment to good governance practices which are embodied in The IMI Way providing a guiding set of values that exemplify how IMI employees should behave ·; The IMI Way was refreshed in 2012 and a corporate IMI Way Day was held in June which included face-to-face training for all employees ·; Policies, manuals, training, business processes and monitoring of key compliance, tax and legal risks ·; Increase in resources dedicated to legal and regulatory compliance ·; Training of employees on The IMI Way and key risk areas such as competition law and anti-corruption ·; Availability and promotion of the IMI Hotline to report concerns anonymously ·; Internal control audits by IMI Group Assurance ·; Anti-bribery, corruption and fraud workshops carried out |
Economic and market environment
| The status of the global economy could adversely affect the Group's revenues. The Group's cost base includes many costs that cannot be reduced in the short-term in line with reductions in profitability. The Group may also be required to reassess the carrying value of acquired goodwill and other assets if certain end markets deteriorate further or for longer, which may result in impairment charges. | ·; Regular updating of contingency plans ·; Regular Treasury monitoring of southern Europe receivables and cash held ·; Diverse business portfolio serving different customers and markets ·; Accelerate growth agenda: Investment in new product development and emerging markets ·; Monitoring of customer and supplier financial security with particular focus on southern Europe ·; Cost base reduction initiatives ·; Effective cash management ·; Allocation of resource to more resilient customers, markets and geographies and focus on global growth trends (climate change, resource scarcity, urbanisation and ageing population) |
Pension funding
| The Group's defined benefit pension arrangements are exposed to the risk of changes in interest rates and the market values of investments as well as inflation, increased longevity of members and statutory requirements. This may result in the cost of funding defined benefit pension arrangements becoming an increasingly significant burden on the Group's financial resources. | ·; Deficit reduction plans where appropriate ·; Closure of overseas defined benefit plans to new members and future accrual where permissible ·; Active management of pension scheme assets and long term view of liability assumptions |
Loss of a key facility
| Temporary or permanent loss of a key manufacturing site or warehouse as a result of a natural disaster or any other reason. A stoppage in production or supply could have a material adverse effect on the Group. | ·; Development and regular testing of robust business continuity plans |
Products and technology
| The Group is exposed to risks associated with the commercial failure of products, projects and technologies such as product liability and warranty claims. The quality and safety of our products is of the highest importance and there is an associated risk if they are below standard. For product claims not covered by insurance, the costs that cannot otherwise be recovered may be material to the Group. | ·; Continued focus on quality and safety, including audits to appropriate quality standards ·; Processes to mitigate the reputational and legal implications of any failure ·; Maintenance of insurance cover for product liability claims ·; Upgrade of talent and focus on functional excellence in quality and product development ·; Contract management resources for both sales and purchases |
IT failure/ computer system collapse
| The Group utilises a significant number of IT systems ranging from web-based sales systems to enterprise resource planning systems. Failure of any of the systems could impact business performance and key customer relationships. | ·; Development and regular testing of disaster recovery plans ·; Ensuring business continuity plans are robust and address temporary unavailability of IT systems ·; Strategy to upgrade or replace key systems |
Supply chain
| The Group has a significant number of contracts with a broad base of suppliers. In the current economic environment there is a risk that their access to credit or adverse trading conditions could lead to an inability to meet their contractual commitments to the Group. In addition, poor quality materials could impact overall product quality. The increasing use of suppliers in low cost economies could introduce risks related to quality or responsible business practices. All this could have a material impact on the Group's results. | ·; Monitoring of risk and development of contingency plans to mitigate the impact of any supplier failure or increased prices ·; Review of supply base to reduce over-reliance on key suppliers ·; Moves to new lower cost manufacturing facilities, ongoing review of alternative low cost suppliers and, where appropriate, supplier consolidation ·; Training and audit programme to validate suppliers' business processes, quality and standards |
Major project execution
| The Group will need to undertake a number of major change projects in line with its strategic objectives including business reorganisation and implementation of IT systems. If these projects fail to deliver the desired objectives in the required time frame it would have an adverse financial impact on the Group. | ·; Upgrade of resources and talent in project management ·; Regular review of project progression by Executive ·; Enhanced risk assessment process including full mitigation action plans for all major change projects ·; Group Assurance reviews |
Failure to attract and retain talent
| A loss of key personnel or the inability of the Group to recruit and retain high calibre managers and engineering talent may lead to the Group not being able to effectively implement its business plans and strategy and experiencing delays, or increased difficulty, in the strategic development of the Group, including in developing and selling its products and services. | ·; Succession plans in place and regularly reviewed ·; Group-wide training and development programmes ·; Increased resources in emerging markets ·; Regular Group-wide employee surveys and action plans targeted by company or geography |
Risk Appetite
The Board has considered the Group's risk appetite and it is considered appropriate to achieve the Group's strategic objectives. The level of risk appetite varies according to the rewards associated with each of the above risk categories. Risk appetite is higher for new product development, emerging market growth and bolt-on acquisitions, in keeping with our objective for further strategic convergence and is lower for employee safety and compliance with regulatory requirements and our code of business ethics.
Enquiries to:
John O'Shea Company Secretary Tel: 0121 717 3700
Will Shaw Investor Relations Tel: 0121 717 3700
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